Final Results

32Red Plc("32Red" or the ''Group" or the ''Company")

Final results for the year ended 31 December 2014

32Red, the award-winning online casino operator, today announces final results for the year ended 31 December 2014

Key Financials

Key highlights:

· Fifth consecutive year of double digit growth in organic revenues, accelerating in H2

· Step up in marketing investment driving top line organic growth and yielding healthy returns

· Three year sponsorship of Rangers Football Club announced in April 2014 

· Successful launch of new sportsbook, 32Red Sport, in June 2014

· Progress in Italy and new marketing campaign launched in early 2015

· Successful integration of the Go Wild UK business, acquired in September 2014

· Strong start to 2015 with current trading up 35% in the first two months of the year

Key performance indicators

· Active 32Red Casino players up 15% to 82,155 (2013: 71,266)

· Casino player gross gaming yield £510 (2013: £485)

· New 32Red casino players up 17% to 44,385 (2013: 38,033)

· Casino player cost per acquisition: £184 (2013: £156)

· Mobile revenues up 89% on 2013, representing 32% of total casino revenues (2013: 21%)

Commenting on the results, Ed Ware, Chief Executive Officer, said:

"32Red has achieved another excellent performance and continues to go from strength to strength. Our increased marketing investment during the period has proved very successful and driven the Company to its fifth consecutive year of revenue and profit growth.

The successful integration of Go Wild UK demonstrates our ability to source and integrate earnings enhancing acquisitions, which build upon our second to none customer service offering. 32Red is a highly cash generative business with a strong balance sheet and I believe there are significant growth opportunities that we are well-placed to take advantage of in the market.

Despite the recent introduction of a new UK regulatory environment, we have achieved a strong start to the new financial year and I am confident in our ability to continue to grow the business for the long term and look forward to the future with confidence."

**Underlying EBITDA is Earnings before Interest, Tax, Depreciation and Amortisation derived from the underlying 32Red business i.e. excluding results from its new Italian operations.

5 March 2015

Enquiries

Chairman's Statement

I am pleased to report another strong year of growth in my review of the Directors' Report and Consolidated Financial Statements of 32Red Plc for the year ended 31 December 2014.

Financial review

Further to our trading update issued on 22 January 2015, 32Red is delighted to confirm a strong trading performance throughout 2014 with total net gaming revenues increasing by 26% to a record £32.1m (2013: £25.4m). This represents the fifth successive year of double digit organic revenue growth and reflects a 25% increase in the underlying business to £31.0m (2013: £24.8m) and a 74% increase in the Italian business to £1.1m (2013: £0.6m).

This strong revenue growth has resulted in a 20% increase in underlying EBITDA to £6.0m (2013: £5.0m), slightly ahead of market expectations and a much improved performance from Italian operations where losses were halved to £0.6m (2013 loss: £1.2m). After accounting for our investment in Italy, Reported EBITDA for the year totalled £5.4m, which is an increase of 41% over 2013. Profit Before Taxation for the year increased by 49% to £3.4m (2013: £2.3m).

The Board is pleased to declare a final dividend of 1.4p per share (2013: 1.0p) bringing the full dividend payment for the year ended 31 December 2014 to 2.4p per share (year ended 31 December 2013: 1.8p) per share. The Group had a cash balance of £7.0m as at 31 December 2014 (2013: £3.4m) and has no borrowings.

Further information of the underlying performance and of progress in Italy is detailed in the Chief Executive's Statement.

Regulation

New Licensing Regime and Point of Consumption Tax (''POCT'') - The new licensing regime in the United Kingdom came into effect on 1 November 2014 with POCT payable from 1 December 2014. 32Red successfully applied for a licence issued by the UK Gaming Commission and continues to closely monitor the competitiveness of the UK market.

Go Wild acquisition

On 9 September 2014, the Company announced that it had acquired the UK customer database of the Go Wild casino from Go Wild Malta Ltd. Go Wild's UK customers were successfully migrated to the 32Red platform on 15 September 2014 and the integration process went very smoothly. Initial trading following migration has been in line with expectations and the board anticipates that the deal will be earnings enhancing in 2015. 

Final dividend

The Board recommends a final dividend of 1.4p per share (2013: 1.0p) bringing the full ordinary dividend for the financial year ended 31 December 2014 to 2.4p (year ended 31 December 2013: 1.8p). If approved by shareholders, the final dividend will be paid on 24 April 2015 to shareholders on the register on 27 March 2015.

Current Trading and Outlook

Trading in 2015 to date has been very strong across the Group's portfolio with January and February net gaming revenues up 35% on the same period in 2014. While it is too early to gauge the lasting effects of the new licensing regime on the UK market, there are fewer brands legally accessing the UK marketplace and 32Red has experienced strong trading over the last three months.

While regulatory changes and additional tax burdens affect profitability and may pose a threat to some operators, we believe that they provide opportunities for 32Red. The Board believes that 32Red is well positioned to exploit such opportunities to accelerate the growth of the business, whether this growth is achieved organically or via acquisition, or both. The Board looks forward to updating shareholders on progress at the interim trading update in July 2015.David Fish QCChairman, 32Red Plc

Chief Executive's Statement

Once again the Company generated record levels of net gaming revenue in 2014, with an acceleration in the second half of the year. NGR totalled £32.1m (2013: £25.4m) and represents the fifth consecutive year of double digit organic revenue growth. This accelerated top line growth reflects a targeted increase in marketing, resulting in increased player activity levels and a fast return on investment.

Overall performance continues to be driven by the sustained growth in casino net gaming revenues, which represents 95% of total underlying net gaming revenues (2013: 93%). 

Casino

The improved recruitment of new players is a direct reflection of increased marketing investment during 2014 with a total of 31,241 television advertisements viewed by 5.4m UK males aged between 18 and 34. While TV advertising continues to be the largest single marketing expense, awareness of the 32Red brand is also increased by our continued support of UK horseracing. 32Red was proud to attach its name to more horse races in 2014 than any other sponsor and recently renewed its agreement to remain one of the four main financial supporters of the All-Weather Horseracing Championships.

On 14 April 2014, the Company was pleased to announce a three year shirt sponsorship of Rangers Football Club and I take this opportunity to wish the Club every success in its promotion push this season. The Company is midway through its three year licence with ITV Brand Extensions to operate an ''I'm a Celebrity...Get Me Out Of Here!'' slot machine game, available exclusively to 32Red customers, and we intend to build further on the success of this initiative in 2015.

Over half of all new customers are recruited via mobile devices and the 32Red mobile casino continues to flourish with revenues up 89% on 2013, representing 32% of total casino revenues (2013: 21%). We expect the trend towards tablets and smartphones to continue and the Group maintains a focus on accelerating growth via these platforms.

Other Products

On 30 April 2014, the Company announced an agreement with Kambi Sports Solutions, a leading B2B sportsbook supplier, to deliver a fully managed sportsbook solution to 32Red. The agreement enables 32Red to offer a significantly upgraded sports betting experience to its customers through online and mobile channels. The new sportsbook is fully integrated with 32Red's Microgaming platform, enabling players to move funds seamlessly between casino and sports and was launched in early June 2014. Initial trading results and levels of new player recruitment have been encouraging and focus is centred on cross selling the casino products to new sportsbook players.

Poker and Bingo operations continue to make steady contributions in highly competitive markets and we expect these products to benefit from increased activity levels at the 32Red casino and from an increased investment in marketing of the 32Red brand.

ItalyNet Gaming Revenue generated from 32Red.it totalled £1.1m in 2014 (2013: £0.6m). A total of 5,011 new players were recruited in 2014 (2013: 5,941) bringing the total number of active players to 8,628 (2013: 7,387). This encouraging performance is despite the Company's decision to limit its marketing investment in Italy during the year, ahead of expected positive changes in the regulated market from the end of 2014. As part of a step change in its commitment to marketing in Italy in 2015, the Company's new series of television adverts began airing from 2 January 2015 and we look forward to updating shareholders on progress in due course.

Outlook

32Red plans to once again increase its marketing investment this year. We continue to optimise the player experience at the 32Red Casino and recent work on improving our messaging and proposition to the market puts us in a very good position to move forward. With modest levels of market share in the UK and in other markets, we believe a number of opportunities exist for 32Red to significantly expand its reach and profile.

Edward Ware,Chief Executive Officer, 32Red Plc

Notes:

1. Accounting policies

The financial statements have been prepared in accordance with International Financial Reporting Standards ('IFRSs') as adopted by the European Union and issued by the International Accounting Standards Board ('IASB'). These accounting policies comply with each IFRS that is mandatory for accounting periods commencing on or after 1 January 2013. The financial statements have been prepared under the historical cost convention and on a going concern basis.

2. Operating profit before exceptional items

3. Segment information

Business segment

For management purposes and for transacting with customers, the Group's operations can be segmented into the following reporting sections:

Non-current assets are used by all the business segments and a split has not been made by segment because management internally review the assets and liabilities in aggregate. Furthermore "social security and other taxes" relate to all business segments and cannot be split in a meaningful way.

4. Exceptional items

During the year, legal costs of £150,000 (2013: £160,100) were expensed in respect of industry lobbying and legal advice received in connection with the UK Government's proposed Point of Consumption Tax and regulation.

5. Finance income and costs

The following amounts have been included in the income statement for the reporting periods presented:

6. Other operating income

Other operating income of £950,000 in prior year represents an early termination compensation payment received from Swansea City AFC Limited. 

7. Earnings per share

Basic earnings per share have been calculated by dividing the net results attributable to ordinary shareholders by the weighted average number of shares in issue during the relevant financial periods.

The weighted average number of shares used for basic earnings per share amounted to 72,950,326 shares (2013: 71,444,360).

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. For share options, a calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the Company's shares) based on the monetary value of the subscription rights attached to the outstanding share options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options.

8. Taxation

In 2014, assessable income is taxed in Gibraltar at the mainstream corporate income tax rate of 10% (2013: 10%).

9. Intangible assets

10. Property, plant and equipment

11. Publication of Non-Statutory Accounts

The financial information set out in this preliminary announcement does not constitute statutory accounts as defined under Gibraltar company law.

The summarised Consolidated Statement of Financial Position at 31 December 2014 and the summarised Consolidated Statement of Comprehensive Income, summarised Consolidated Statement of Changes in Equity, summarised Consolidated Statement of Cash Flows and associated notes for the year then ended have been extracted from the Group's 2014 statutory financial statements upon which the auditor's opinion is unqualified and unmodified. The full 2014 statutory financial statements are detailed on the Company's website www.32Redplc.com.

Those financial statements have not yet been delivered to the registrar of companies.